With a market cap of $33 billion, SoFi Technologies (SOFI 3.55%) might fly under the radar, especially at a time when the investment community's attention has gone mainly to companies working within the artificial intelligence (AI) boom. But this digital banking powerhouse should not be overlooked. It's successfully carved out a niche in the financial services industry.
This fintech stock has been a huge winner. The share price has surged 80% in 2025 (as of Dec. 5), and it's up 489% in the last three years. Momentum has definitely been working in the company's favor.
Should investors buy shares in SoFi right now? By looking at the fundamentals and valuation, investors will gain the right perspective to make an informed decision.
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SoFi has been on an incredible trajectory in recent years
It's been quite impressive to see SoFi's financial performance. All key metrics keep trending in the right direction. The business added 905,000 net new customers in Q3 (ended Sept. 30), bringing the total to 12.6 million. And it collected $950 million in adjusted net revenue during the quarter, which was up 38% from the same period of 2024. These two figures are significantly higher than just three years ago.
CEO Anthony Noto has his sights on a lofty goal, which is for SoFi to be a top 10 financial institution in the U.S. one day. Given that the banking industry is so large, there is definitely room for SoFi to keep expanding. Of course, it must continue operating at a high level.
Like other banks, SoFi's growth engine will be revved up by its ability to capture cross-selling opportunities, getting existing customers to use more products and services. Innovation is another factor to keep in mind. SoFi finds ways to better serve the needs of its user base. It recently launched cryptocurrency trading, as well as remittances enabled by the Bitcoin lightning network.
It would be concerning if SoFi wasn't yet profitable. However, it has posted positive generally accepted accounting principles (GAAP) net income for about two years now. And the bottom line has expanded. Adjusted net income is projected to total $455 million in 2025, double last year's figure.
SoFi looks like a good business, especially when you view its fundamentals. However, investors sold off the stock on Dec. 5, likely related to the company's decision to raise $1.5 billion in equity. Management plans to use the cash for a broad range of purposes. But the market's reaction indicates that investors are concerned that this might mean SoFi isn't in as strong of financial shape.
For what it's worth, the business does have lots of growth opportunities, so the fresh capital can go to good use in an effort to expand the customer base and increase revenue and profits. What's more, SoFi raised the same amount earlier in the year in July, and the stock has climbed substantially since.
NASDAQ: SOFI
Key Data Points
The investment decision depends on your valuation perspective
Any investor who takes a closer look at SoFi will likely come away impressed. The business has clearly found tremendous success in a competitive banking industry that has dominant firms leading the charge. And it's doing it with an intense focus on technology, data, and the user experience. SoFi looks to have a long runway of huge success in front of it.
This fintech stock should make it on investors' watch lists. It certainly passes the test from a quality perspective. The next piece of the puzzle is valuation. In an ideal world, investors would be able to buy the stock when it's cheap.
A valid argument can be made, though, that the stock is expensive these days. Its monster performance, soaring 489% in the past three years, has resulted in the current price-to-earnings ratio of 50. SoFi undoubtedly has the potential to be a long-term winner for your portfolio, but investors must assess just how comfortable they are with the valuation.
